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How the Shipping Industry Is Trying to Cut Its Billion Tons of CO2 Emissions

These translations are done via Google Translate

Shipping’s global regulator is pushing the industry to achieve net zero greenhouse gas emissions by mid-century. Getting there will mean transforming a sector that’s still largely powered by fossil fuels and accounts for about 3% of human-made carbon dioxide.

1. What’s the current state of play?

Shipping carries more than 80% of world trade and in total emitted more than a billion tons of CO2 in 2018, according to the International Maritime Organization’s most recent greenhouse gas study — a global reference for estimating GHG emissions. While companies are ordering ships that can run on alternative fuels like methanol, and dipping into emission-cutting technologies like wind and hull-cleaning robots, the overwhelming majority of the fleet is still burning oil. Houthi attacks in the Red Sea area have also forced carbon-spewing ships to take longer routes, adding millions of tons of pollution. Sanctions on Russia and drought in the Panama Canal have also pushed cargo-carriers to sail significantly further.

2. What could replace oil?

The fuels that may replace today’s oil-derived propellants must slash emissions, have enough power to propel gigantic vessels around the globe and be price-competitive. Here are the main candidates:

  • Biofuels
    • Pros
      • Can substantially lower greenhouse gas emissions
      • Already produced and used in shipping
      • Relatively easy to store and transport
      • Can be used to power existing engines
    • Cons:
      • Supply is a potential barrier, with competition from other sectors, including aviation

3. How are regulators trying to drive decarbonization?

In July 2023, the IMO set a series of non-binding targets for cutting emissions. They’re a significant step forward from an earlier 2018 plan, but still fall short of clear alignment with the 2015 Paris Agreement goal of restricting global warming to 1.5 degrees Celsius above pre-industrial levels.

The IMO is working on new rules in pursuit of its emissions goals: a phased reduction in the GHG intensity of ship fuel, and the world’s first global, mandatory charge on GHG emissions, currently scheduled to come into force in 2027.

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Meanwhile, shipping is now subject to the European Union’s Emissions Trading System, which requires payment for carbon emissions. Progress is also being made on Green Shipping Corridors — specific routes where zero-emission shipping is supported by the public and private sectors.

4. What else is the industry doing?

Last year, less than half of the total gross tonnage of new ships ordered was capable of running on alternative fuels — including LNG — according to Clarksons Research. Maersk is one of several shipping companies that have ordered methanol-capable vessels. The Global Maritime Forum, a not-for-profit foundation, tracks zero-emission projects and helped to develop the Poseidon Principles, which measure financial institutions’ loans to the shipping industry against GHG reduction trajectories. In the most recent report, 29 out of 30 institutions fell short of the IMO’s targets.

Big customers of the industry are starting to use their clout: Last year, companies including Inc. and IKEA issued a tender for container shipping services using close to zero-emission fuels, which has subesquently been won by Hapag-Lloyd. Emissions-measuring technology will be deployed on an LNG carrier chartered by trading giant Trafigura, and Cargill has been experimenting with sails — so-called WindWings made from steel and composite glass. There’s also the possibility of fitting ships with carbon capture technology. One such system has been installed on an Eastern Pacific Shipping tanker.

The industry still has a long way to go: More than 93% of the world fleet runs on conventional fuel — which is almost all oil-based — when measured by gross tonnage, ship-classification society DNV said last year.

5. What’s next for shipping?

The IMO will keep working on measures to cut emissions, with its Maritime Envrionment Protection Committee scheduled to start a week-long meeting on September 30. Meanwhile, the EU’s FuelEU Maritime regulation, requiring emissions reductions relative to energy use, comes into force next year. The bloc’s ETS is also set to ratchet up and to eventually include methane and nitrous oxide. On the other side of the Atlantic, Washington’s Inflation Reduction Act includes $3 billion of maritime-related funding, and US senators last year introduced bills aimed at reducing pollution from shipping.

The Reference Shelf

  • Related explainers on the attacks in the Red Sea and their impact on shipping, why it took so long for supply chains to recover from the pandemic, hydrogen as a fuel, and how Europe plans to tax CO2 emissions beyond its borders.
  • The IMO’s explanation of its work to cut emissions from ships.
  • link to download ship classification society DNV’s Maritime Forecast to 2050.
  • link to ship classification society Lloyd’s Register’s Maritime Decarbonisation Hub.
  • Maersk Mc-Kinney Moller Center for Zero Carbon Shipping’s alternative fuels summary

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